Wednesday, October 12, 2016

Memo from Justin Draeger - Follow Up on IRS Confirmation of Nonfiling Letter

During the MASFAA conference, a member from a community college raised the concern that applicants and parents who did not file a 2015 tax return and who are selected for verification for 2017-2018 will be required to obtain a letter from the IRS confirming that they did not file.In his presentation, Jeff Baker said that he did not know if the IRS is ready for the volume this will generate.As a community college aid director, this member justifiably feels that this new requirement adds a barrier and delay for poor students trying to obtain the funding they need for 2017-2018. He asked if we had and if we will apply any pressure on the Department to work with the IRS on creating a process for obtaining proof of non-filing that is easy to use and provides a timely response.

I went back to DC and conferred with the NASFAA policy team and they reminded me that we did object to that requirement in the spring when they first announced it, but we were rebuffed by ED because the data they had for 2014-15 showed that nearly 15% of parents and 17% of students who reported that they did not file, actually did file. ED felt that that was a lot of apps and a lot of possible incorrect amounts. Of course the bigger question is whether any of those changes resulted in any changes in EFC (since most Pell students are zero EFC regardless). On Friday we sent another note over to ED on this and haven’t heard back just yet. We did get a commitment previously that they would re-look at this as the data came in. We also suggested that it would be best if the non-filing applicant could use the DRT at the time of application to certify that they didn’t file taxes, so then they wouldn’t have to go through the mostly manual IRS process to request a certification on non-filing later if they were selected for verification.